Don’t worry if you don’t have these figures to hand. You can check your online banking or online utility accounts to see what you spend.

If you don’t have these set up yet register for them, and keep your login details safe.

2. Calculate your income

Your income is the money you receive each month from any work you do, as well as from benefits, pensions, investments, or money from partners or relatives.

If you’re self-employed, base your budget on the net amount you can draw from business. This is the amount left after all taxes and business costs are paid. If you need help working this out, contact Business Debtline.

Top tip: If you are spending a lot of money every month on debt repayments you may need debt advice. Use our Debt Remedy tool to get online debt help now.

4. Don’t forget to budget for one-off expenses

One of the aims of creating a budget is to plan your spending thoroughly. Do you need to pay for a large one-off expense later in the year such as a car MOT, or a repair to your home? Make sure you add this to your budget.

You can do this by taking the amount you’ll need for the one-off expense, then dividing it by 12 and adding it your monthly budget. You then put this amount aside every month. Putting it in a savings account away from your day-to-day bank account can help you avoid dipping into it.

5. Check if you have a ‘surplus’ or ‘deficit’ budget

Once you have added together your monthly income, and taken away your outgoings – have you got money left over?

If you do, this is called a ‘surplus’. You should use this to pay towards any debts you might have, or add this to a savings account. If your surplus is small then we’d recommend getting debt advice now.

However, if you’re spending more than your total income each month you have what’s called a ‘deficit’ budget.

Spending more than you have coming in means that you’re at risk of getting into financial difficulties, especially if you’re using credit to pay for everyday living costs, or are dipping into your overdraft on a regular basis.

You may want to consider revisiting your budget to see if you can cut back in any areas. You should seriously consider getting debt advice – using overdrafts and credit cards in this way is a danger sign of debt.

6. Set up a savings account

If your budget allows, you should set up one or more savings accounts so that you can start putting money aside each month.

It’s a good idea to set up one for larger, planned one-off purchases, and another for creating an ‘emergency fund’. It can be tempting to dip into your savings, so a handy way of avoiding this is to get a savings account with a different bank, building society or credit union that isn’t linked to your current account.

Having some ‘rainy day’ savings can help you avoid getting into debt if you have an income shock such as redundancy or illness. In fact, in a recent report we revealed that over half of the people we asked told us that emergency costs they had to pay could have been covered with savings of £300.

Top tip: You should also get into the habit of checking your online banking regularly.

Tracking your spending helps you understand where your money goes, but it can also affect how you spend your money too. Writing down every penny you spend may make you less likely to splurge on something you don’t need.

8. Use cash not card

It’s very easy to lose track of your spending if you’re using your debit card, and especially if you’re using contactless payments.

Try to withdraw cash for purchases rather than using your debit card. And only use your credit card for purchases when you know you can repay them in full when the statement comes through.

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